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Private Label

As Carrefour Launches A New 'Value' Brand, Many Other Retailers May Soon Follow

The launch of the new Carrefour 'Simpl' private label brand may be one of several value-tier launches across the European grocery landscape in the coming months, as the threat of a long recession looms.

Last week, trade publication Retail Detail reported (see below) that Carrefour Belgium introduced the new Simpl value brand across a number of categories, with more to follow in the coming weeks.

According to a Carrefour Belgium spokesperson, the new range is "more attractive and modern" than previous value-tier ranges, and is to be rolled out in several European markets.

Economic Challenges

The impact of COVID-19 leaves European facing up to what could be a historic recession, with France, Spain and Italy recently reporting double-digit quarterly contracts in their economic output – in turn presenting retailers with an opportunity to ramp up their value offerings.

As retail analyst Olivier Dauvers pointed out on his blog, the launch of Simpl isn't the first time that Carrefour has responded to looming economic hardship with a new private label launch – in 2009, it unveiled Carrefour Discount, partly in response to the global economic downturn, and partly to counter the growth of Aldi and Lidl.

As Dauvers pointed out however, Simpl does not bear the Carrefour logo or emblem, meaning the new launch does not "pauperise" the master brand. In fact, the only hint to its origins is an address to Carrefour's office in Massy.

Carrefour isn't alone in rekindling its value-tier offering, of course – back in May, Waitrose & Partners announce that it was relaunching its Essential Waitrose brand (also originally launched in 2009), while in the US, retailers including Walmart, Kroger and Albertsons are ramping up investment in their dairy sourcing operations in order to keep prices as low as possible for shoppers.

While premiumisation has been a consistent trend in private label for some time now, the near future may well see value for money outweigh all other purchase considerations, and grocers are eager to respond.

Wider Trend

As private label expert Koen de Jong told ESM Magazine recently, private label is likely to be a beneficiary of the COVID-19 crisis, as shoppers “don’t feel the need to pay more” for cupboard staples, and will likely choose private label over branded equivalents.

As he explained, the economic repercussions of the coronavirus crisis could be long-lasting, with households facing a significant drop in average income.

This would open the door for competitively priced private-label products, as was the case during the global economic downturn, which commenced in 2008.

“History has shown, many times before, that in times of economic contraction, private-label market share has grown,” says de Jong.

“Then, when the economy recovers, private label retains its position, because a new cohort of people have tried private-label products for the first time, and think twice about going back to branded products.”

© 2020 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine

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